Disney, DAZN and the Race for Sports Audiences

0:06Hello, everyone, and welcome back to the next episode of Streamtime Sports. My name is Chris Stone, the community lead joined as always by our CEO, Nick Meacham. Now, Nick, yesterday I did something, and I'm not saying it's exclusive to parents, but I feel like it might be a parenting thing. I got about four or five hours into the day before I realized, Nick, I've been wearing my shirt inside out.

0:26Were you at home or were you out and about? we were i was working from home so like i can understand why no one like called it out yeah yeah but like i went on to a call and i was like why does my shirt look so weird because it was a it was a nike golf polo um and you get to get home and i'm just like my shirt is inside out i've been wearing this for like five hours and just did not realize my shirt was inside out nick well at least upside you worked it out eventually did anyone tell you before you realized or was it just like the light bulb went off and hang on something's not right here light bulb went off because you know when you jump on a team's call and it sort of shows you what how you'll present yourself to other people so to that point i just been just working doing emails things like that and then i turn on just like that's weird that looks off and then i look down i'm like oh it's inside out oh gosh i have the last time i've done that uh was i i blamed i got changed in the dark so it was hard to see what i was doing but uh yeah you should work it out pretty quickly i'm pretty sure you'll learn from this and you won't have the same you'll have that little extra double check next time around so uh as long as you don't start doing it in the office every time you come in that's uh that's a real warning sign very very true very true and like i said i will blame it on this is our first week of doing nursery drop-offs so it's just one more thing added to the agenda to do in the morning and you're just throwing things on trying to get the day going but uh like i said i don't think that experience is maybe exclusive to people that are parents but i feel like i might have a greater degree of sympathy from people um who are parents especially of I would definitely agree.

1:54And particularly at the age range that you're operating in now with your young one, that, yeah, is normally the time where the brain starts to play games on you. Yeah, especially because I had a little delayed two weeks of paternity, Nick. My wife returned to work after nine months. So I took off two weeks while she went back to work. And honestly, Nick, it was not, you know, it was two weeks off work, but it was not two weeks off. Very mobile, very sneakily fast. I would say we're having to put in the child safety things because he'll climb on everything. So you got to start putting the little hooks on all the doors and everything.

2:30So you can't pull them open. So it was two weeks off, but it was not two weeks off mentally. It was locked in Nick. You sound like you were just giving a little bit of a quick combine athletic profile there with like sneaky, quick, agile. But yeah, I know. Yeah. That's that's, that can be challenging when you, when you head to the point where you kind of like can't sit still or take your eyes off the ball for a second. Otherwise, carnage ensues. Absolutely not. And Nick, you know, you take your eye off the ball for one minute in the sports world, and the next thing you know, all these news stories keep coming out.

3:06And Nick, it has been a busy couple weeks with some news stories and things that we're going to cover. We'll cover some stuff, particularly on DAZN, and just put it out there, a little warning. We're going to do a whole deep dive on DAZN. I don't know about you, Nick, but on LinkedIn this week, it seemed like every single day they were announcing something. You know, we're not going to go through every single news story they covered, but they've done quite a bit of news here in the last week alone. So in one of these upcoming episodes, we're going to do a full deep dive on them. There's been quite a bit of news, Nick, over the last kind of two weeks or so.

3:35The first one we're going to start off with, though, Nick, is looking at Disney Plus and Formula E. Now, just to provide some context on this, Formula E signed a multi-year global streaming agreement with Disney Plus starting in the 2026-2027 season, covering 144 territories worldwide. The deal is going to include every practice session, qualifying sessions, races, highlights, shoulder programming, behind-the-scenes content. Formula E has come out and explicitly said it is prioritizing audience reach over exclusivity with Disney+. This is also going to sit alongside some of its existing free-to-air and pay TV partners rather than replacing them.

4:08In the U.S., Formula E will be available on both Disney +, and ESPN +, giving them access to the entire entertainment ecosystem that exists within the Disney ESPN world. But Nick, I guess what's really interesting about this is we've seen different sports organizations recently being put in tough positions having to choose between larger reach versus larger media rights values. And it seems quite often many of them have gone towards the larger media rights deal, whereas formula e has come out and explicitly said they are prioritizing global reach over that so do you think that this is perhaps blazing a new trail um by formula e in terms of taking this longer play of global reach over short-term revenues look this announcement um formula with disney is exciting more that disney is now committing to global sports deals i think it's less interesting really from the Formula E side.

5:09It's really following the same playbook and model that they have been operating for quite a while now, which is building a business around getting reached through various TV partners, previously from a local perspective, and monetizing through the different sponsorship relationships they can create from a series-wide level as well as other teams and beneath that. So this is just more following their status quo of their existing strategy that they've had and have been running with for since I can remember. And look, frankly, the matter is they have no doubt are finding it challenging like any. They are definitely a tier two sport classification of finding interest in paying serious money for media rights.

5:51So they've been one of the ones that have been quite open from, you know, pretty from day dot. We're not going to try and get media rights deals paying, you know, huge premiums. I'm sure they would take it but they accept that that's not going to happen and aren't like trying to hold back the opportunity um to try and hope that they're going to get immediate rights check eventually they are all in on maximizing reach and exposure from a commercial perspective and leveraging that through its sponsorship partnership so um i don't really think they're blazing any new new um sort of trails i think it's an easy win for disney to get again layer on uh to its strategy now of leaning in more and more to sports on the disney plus platform to get a nice global deal with a global property that can give them that something to add to the programming mix as they kind of readjust themselves to be more aligned with some of the other streaming platforms.

6:41So that's kind of how I'd see it in a nutshell. Well, with Disney specifically, as we mentioned, Formula E isn't necessarily one of the top tier sports properties that are out there. So what does Disney gain by adding a sports property? And it's not a small amount of coverage. There's lots of things in there. I mentioned it's not even just the live races. it's a whole wealth of content there what does disney plus gain by adding this to their portfolio globally yeah i just think that is get a new set of rights that basically has serious scale by it in the fact that now in every single market they can always have at least formulae available and visible in their marketing of disney plus as a platform for sports rights we've seen them take a more localized approach in a variety of different markets you know particularly here in um in the Scandinavian region with the Conference League, Europa League, et cetera, originally, which was the first move they made here.

7:34Champions League is coming in 27, 28 as well. In some markets, they've got, I think, NCAA. They've got even NBA and NHL in a few markets. They're building incrementally, particularly across Europe. And I think this just gives them something to just instantly ramp up the narrative and the positioning and marketing, frankly, of the fact they have sports rights to play with. it's formulae has one of these brands that i tell the story without adding any serious needle moving value to like acquisition but it's enough to it's more of a retention tool of like hey we've got extra sports live sports content you can get access to and would i would i log on and watch a live formula e race i wouldn't go after it but if it was on when i was sifting through channels and i might check it out for a bit and see if uh it tickled my fancy so that's There's always all these different strategies at play here.

8:23Disney has clearly stated and shown they are moving more and more into sports on the platform. And so this is a nice little win for them. And also Formula E hasn't had to overcommit either. They've said it's not an exclusive relationship. They're able to keep all their other existing partnerships at play. So it's not like they've had to commit or overcommit something which might limit their visibility in other markets where Disney Plus isn't at the scale or at the mainstream level that they would be hoping for, for its storytelling around sponsorship. And with Disney, as you mentioned, they've done some localized deals on a regional level or domestic level.

8:58They've not necessarily done anything at an international level. Do you think, just based on what we've seen, this is simply just a question of if versus or a question of when as opposed to a question of if they start doing more sports? Because it feels like we've seen this play out with other certain folks where, you know, Amazon used to take much more of a more regionalized approach. but then they've done some things with the Black Friday game with Amazon coverage. It's international. You see more of that similar with Netflix. Do you think the question is when, as opposed to if, Disney starts going after more rights?

9:31I feel like they're sort of sitting in between Netflix, Amazon, and in their approach here. I kind of feel like that there's no way they would just stay with a global deal with Formula E and be content now. We've done global, right? But it doesn't mean necessarily they're going to go start throwing the checkbook at more rights deals. I think Formula E are so content they have an established model around the reach play of monetization that they're kind of probably just happy to do a very low key deal to get that global reach. And storytelling around being connected with Disney globally is a nice story to be able to tell potential partners that that deal was a pretty easy one to do is my guess.

10:08so I would expect other sports properties particularly the lower tier who want the reach and visibility globally would be very interested in talking to Disney now as long as they're not trying to be naive to expecting Disney put a lot of money on the table they'll give them the visibility and reach they'll be after and then that's probably it so it's about that whole meeting of reasonable pragmatism between both parties about what they want to get out of it and I would expect Disney to announce a few more but it feels like there's a bit of an There's a race going on. I'm fleshing out the amount of live sports on the platform because there is so much interest in it.

10:40We're going to talk about DAZN and others in a second. There just seems to be more interest in the lower-tier sports live opportunity because you can get instant scale on live rights as long as they're not expecting a big media rights check behind it. It's an interesting dynamic right now. And I suppose just thinking aloud, Nick, Disney also has a unique advantage compared to an Amazon or Netflix or these other organizations and that it does have ESPN as part of the larger Disney family where sometimes it might not even necessarily be about acquiring more rights and more just about the actual distribution of those.

11:16Can they potentially get some of those rights that are held by ESPN onto Disney? I was just kind of thinking that as we're going through there, you know, I think one of the things we're also going to talk about later, particularly with some of the DAZN stuff, is how much of it's about the distribution of rights as opposed to necessarily the ownership of rights and i think perhaps disney does have that in their back pocket as well they can potentially flip that switch well it's an interesting one disney has tried to launch espn globally multiple times in different ways and people could look at it how they want i'd say largely it hasn't worked you know the espn of the us has not transferred in the same way to other markets um i'm going to call this like round three maybe that they're trying to do this and maybe there's more more or less versions of that depending on who you ask but this gives them a nice piece of ip nice piece of branding that if it works if they can start to build the trust in the espn brand outside of the us as a destination point which i think is smart like if they called it like disney plus sports yeah it'd be lost on people but espn just gives a little bit of extra gravitas i think some people particularly with the american sports connection that will pay it much more attention than if it was just lost into the Disney Plus platform.

12:25But this is a very low risk attempt at globalizing the ESPN brand. Like just putting, you know, the streaming has democratized the ability to get these types of platforms up and running. And ESPN now doesn't have to establish and invest so much resource into scaling its global, globality. They can just buy a few rights here or they're plugged into the ecosystem and kind of see how they go. Well, they've got this other, all the relevant entertainment mix alongside it doing its thing to bring people onto the platform. that just don't have to work nearly as hard to attract audiences to make the ESPN play really pay out.

12:59And so I think it's a no-brainer for not only Disney to move into more sports, but also for them to use ESPN brand. Initially, I was a bit skeptical, but are they going to continue to do more and more with this? Just think about the possibilities that ESPN can become a real global media brand, you know, editorially between matches. At the moment, it's a US sports platform are best for anyone outside the US. And just, it could be so much more if they can get all those things right. So I'm bullish on what it could be, but whether that's actually a needle mover enough for Disney, Disney needs massive, massive success basically to make it worthwhile.

13:40Otherwise I would just shut it down and move on. The final thing I'd add is that on all of this, Disney feels like they're trying to be more and more, as I said, like Netflix, which... For me, it does eat away at Disney's identity a little bit. Disney, for me, used to be what everyone thinks of Disney is, as this sort of family brand. And now that is sort of being changed in real time with this shift to becoming more of a 360 entertainment platform. I do just wonder where we're going to get to with Amazon, Netflix, Disney and co, and then Paramount as well as what they're doing, all kind of replicating.

14:19they're kind of homogenizing the playbook where they're all going after a bit of live sports because live sports, a big needle mover from advertising revenue as well as acquisition and retention, blah, blah, blah. They've all got a mix of kids content, live, original, repeats. It's just, again, it's almost like going from like fragmenting of content from a live sports perspective, but it feels like all content is now fragmented. And I'm just like a bit lost as to where this is all going to end up. But Disney are clearly trying to position themselves as one of the big platforms. They are one of the big platforms.

14:55And they needed that final piece, which is sports. And who knows where they'll go to. But I bet you a lot of people in the industry are very excited about them dipping their toes further and further into sports. It's a really interesting point, Nick, because even anecdotally, I still find it weird to think about Star Wars and the Marvel world being a part of Disney. And I think to your point, like you do start to lose some of that USP of what Disney is, because certainly that's what I think when I think of Disney, particularly now with a nine month old and imagine all the Disney movies I'm going to rewatch and things like that.

15:24And yeah, losing that brand identity. It's almost, Nick, completely side piece. I read a really interesting thing about private equity, why every fast food restaurant looks the same. Now, you remember McDonald's used to have the big red roof and all that and Burger King had. But now they talk about private equity. The reason why all fast food restaurants look the same, because it's just about the value of the property, not about the actual restaurant. So if you ever need to sell it, you can just slap another logo on there. It's sort of like all these streaming businesses, Nick. They just all look the same.

15:50Well, yeah, that's interesting. I've heard the McDonald's analogy of that, but I didn't realize that was everyone was trying to follow their playbook, but it does make sense. I think the thing with Disney now, I do more of a personal consumption thing here is I've stopped subscribing to Disney a while ago because I just had too much of it. Like I don't need more. We don't watch a lot of TV, particularly we don't have like the kids in front of the TV very often, except for on the weekends. and whatnot. So not really worth having. But you know what? The sports acquisition now is now making me think about dropping Netflix and leaning onto my other platforms for the first time.

16:27I've never really considered that, right? But I've got access to the local streaming services in Sweden where I'm based. They have quite a wide-ranging portfolio of stuff as well, international and domestic. with this adding the sports stuff now it's more of it's it's arguably as appealing and interesting at least for a window of time like i don't i think netflix has got more breadth and depth to it no doubt but i haven't watched and engaged with disney for so long there's actually loads of content i've not watched on the platform that i can get access and value from plus adding the live sports component to it i'm now much more intrigued so for me personally it's definitely made me more interested in Disney.

17:07And also, it's about half the price of a Netflix subscription, at least from what I've seen. I can get, there's Disney offers galore from different telcos and so forth. You can sign up and get it free for a few months if you go into it. So it's cheaper. And so depending on what you're after, it's arguably more valuable now to me than it was before. And I'm getting quite frankly peppered by my son who, after watching the World Cup, wants to watch more football, wants to watch Real Madrid and wants to watch some of the stars that he's seen, I can't get that through any of the other channels except the most expensive service in Sweden, which is like£60 equivalent a month if you buy it not through a telco arrangement.

17:50So, yeah, Disney might win me over with these moves, frankly. Maybe. Well, we'll follow up. We'll see, Nick, if it sticks. But, yeah. But moving on, Nick, we mentioned DAZN. I think our next three stories all include DAZN in some way. But the next one we're going to talk about, if you are active on LinkedIn in the industry, I feel like it would almost be impossible to miss the fact that I think they've published an announcement pretty much every day this week, and we'll focus on two of them. One of them, I think, more relevant, one for me a bit selfishly. But there's a whole list of things going on right now with DAZN on LinkedIn.

18:21I mean, shout out to the PR team at DAZN. They have always worked their backsides off, but they must have an announcement going out every other day. and the hard part i found find is if you're listening um is that they treat every announcement kind of the same which makes like which makes actually difficult to like um notice what's what's what's noise and what's actually significant you've got to really lean into it and for a while there it was getting just a bit noisy with some of them they were giving everything the announcements but there has been a few very interesting deals of late so that's the few of the ones we're going to talk about today?

18:54Yeah, well, I want to start with the Everpass deal. DAZN has agreed to acquire Everpass. For those that aren't aware, Everpass is the commercial sports distribution business serving different businesses, bars, restaurants, hotels, and other venues. The acquisition gives DAZN control of commercial distribution of NFL Sunday ticket, obviously a big premium in the U.S., but it also gives them distribution content that includes the Premier League, UEFA Champions League, NBA, Major League Baseball, MLS, Formula One, NASCAR, Collegian Sports. So you're talking about most of the major sports across the US.

19:28I don't really understand the scale we're talking, and you've touched upon it, but think about the culture in some of the particular the US, the pub culture around sports. They are the central point of you can't watch live NFL on Sunday without Everpass. They had that exclusive relationship around the whole country. so it just shows i think for people like for anyone who's ever watched a piece of live sports in a bar or a pub those have a commercial deal in place and everpass is effectively a monopoly on this set of rights there is i did some research and there is another player but but they are the monopolist when it comes to those rights you just talked about which i think is an important distinction just because they have real impact and reach with with the visibility they create yeah trust me my wife her big um thing that she dislikes about going to the u.s which is the thing I love is you can't go sit down in any bar restaurant and there not be a hundred TVs with sports on all the time.

20:23Like anyone that's a U S listener will know it. Anyone that's traveled to the U S will know it. Like, you know, there's a lot of pubs in the UK don't have TVs, but you go to the U S you're just not going to find one that doesn't have at least 20 TVs with games on all the time. Definitely. I mean, I, that's why I love business board everywhere. Uh, but it's, uh, it's not really, not really a viable option when you travel across the other side of the world. Yeah. And just for clarity, just adds more depth that, you know, some of the owners or people that have invested in Everpass, include Redbird Capital, who we know quite well is one of the leaders in this space.

20:52TKO has a holding within it, the NFL's investment arm, 32 equity. There's multiple people that have stakes in this that are big businesses. So strategically for the zone, it gives them more of a B2B place in the sports ecosystem and strengthens their U.S. presence. So Nick, I guess we're thinking about all the different deals. You know, they're obviously acquiring different rights deals. We've also seen things we've spoken about in the past about their tech acquisition of companies like ViewLift, and they've done other deals like that. How does this deal, in the way it fits from a B2B perspective, fit in with the broader strategy of what we've seen DAZN doing?

21:25It's a really interesting question because for a while now, I'd seen DAZN make moves kind of away from being a B2B business. They had a load of layers to them, right? They had this investment they made into an Israeli tech business, which they, I can't remember the name of it exactly, but they ended up rebranding it to DAZN Tech or something, I can't remember the name. And they did build this out. And then what it felt like they had basically a while ago is they started integrating all the tech into the business and basically said, you know what, there's not enough value there from a shareholder perspective as we look to sell.

22:03We're going to focus on being the best sports streaming consumer business in market. But the last couple of announcements we've seen, serious like needle moving announcements with View, Lift and Now Everpass are going back into this sort of, they're both B2B businesses, but they're more B2B to see really, because they both are enablers to the consumer and have access to the consumer through their platforms. Whereas the other B2B businesses were more out and out service and tech providers, just enabling sports and streaming platforms. So it is interesting to see these different layers. Do I mean this in a nice way?

22:40I'm just going to say, basically, I see that DAZN, I call them, I would call it a bit of a Frankenstein now. And I mean that in the fact they've just been adding parts to this body that they've worked, that they're building out, which some of it feels just opportunistic. Some of it feels like really adding value to the mix of the business. You know, if you think about they bought a telco in Australia, they've bought the commercial pub platform of choice in the US. They bought a D2C platform with RSN relationships in the US. They have these NCAA announcements. They've got random sports popping up all over.

23:21It just keeps bringing stuff in that doesn't seem to have a cohesiveness or a logic necessarily completely behind it, other than we want to build scale of this business that they obviously – everyone knows they want to sell at some stage. I've got an interview with Andrea Radrizani, who's on the board, that we are going to publish soon where he talks a little bit about the fact that basically they are, and everyone knows it, setting themselves up for an exit and a sale at some stage. But it's a bit of a Frankenstein because all these just pieces of businesses being brought in, most of those relationships are done through equity plays.

23:56So there's not a lot of cash being exchanged. That is, we're going to add you in, just keep building out the shareholding and the equity, the net overall value of this business and you'll get your dues when we sell. So I don't know. It just creates a lot of pressure. There's a lot of different shareholders now involved in this business, whether it's the new ones you just talked about with Redbird and TKO and the like and Foxtel in Australia and all these things that are basically all waiting for this moment to happen, to get their dues. They're hoping that some of all these parts has built a bigger and bigger and bigger business to make it worthwhile to not get paid at the point of transaction because they wouldn't have been paid by the design anyway because they're hemorrhaging money still.

24:43But they'll get paid once the business goes public or gets acquired by some sort of behemoth. So yeah, I'm not sure Frankenstein's a nice way to put it. I kind of see there's not necessarily a negative way, but it does feel like a bit like that to me. Well, I mentioned in an upcoming episode, we'll do a full deep dive where we go through sort of the evolution of the zone. I think part of that conversation you just had there, Nick, about what the future outlook and some of the meaning on all of that means. But for this one specifically, what strategic value does the commercial viewing provide that maybe the consumer subscription alone does not?

25:16Because you sort of mentioned it is a B2B play, but it is a B2B to C play because that is a commercial deal with another business, but it's ultimately about getting that content out in front of consumers. Well, I'm going to be intrigued to see how the zone approach the opportunity to get their brand out there, right? So they have acquired a whole set of rsn rights which we'll talk about in that upcoming episode but we've covered it you can go see on sports friends website there's a bunch of announcements that have been made so they're starting to mop up more and more rsn's they want to build a brand of visibility and network and audience whatever you want to call it in the u.s for various reasons and obvious pretty obvious ones so this gives them another reason another touch point with quite a scaled audience so again when they're talking to investors in the future they'll be able to talk about the reach and impact and revenues that this business is generating.

26:05And plugging in a business that ever passed is probably around the 200 million range, I think is the last time I saw a number suggested, which was maybe from Alex Kaplan, who's the CEO of the company. It's a decent number of revenue, whether it's loss making or profit making, I can't tell you. But it gives them some meaningful scale in the US when you start adding all those layers. And that's been the Achilles heel or the missing link for DAZN. They couldn't get that scale when they came into market. RSN valuations were too high. All the key league rights were all mopped up by all the major platforms, ESPN and all the other, and NBC and the like had already got in and done these long-term deals.